Explains reasons why.
An initial public offer (IPO) or buyout? This was the question directed at The Good Guys, CEO Michael Ford by Appliance Retailer at an Australia-Israel Chamber of Commerce lunch in Sydney on Wednesday.
Ford was clear: “IPO – we’d like that. The reason for the IPO is to raise capital to roll out more stores throughout the country and a strong focus is in New South Wales. We own 44 of our stores and the balanced are franchised and we expect to complete the buyout of the remaining stores by July 1.”
When asked about the likely share price on the potential IPO, Ford remained tight-lipped. “We have not even delivered a prospectus yet. There is phenomenal interest in the brand. The brand is intrinsically and extrinsically very strong so for investors the company has a well-established brand and seasoned management team that has run the business for many years so it will be well received. “This is very different from others.”
Ford said he had met recently with JB Hi-Fi, the leading contender in the takeover stakes. “I have met JB management. They like our business. They would like to expand in ‘home’ and we would be a good vehicle and a good partner to do that and the other (reason) is to be an ally rather than our opposition.”
However, Ford admitted that the election is putting a dampener on business confidence “slightly”.
“I don’t allow the management team to use the economy or the election as an excuse, as there are far too many things to fix inside our business. Consumer confidence with the interest rates as low as they are and the equity people have in their homes is pretty good, and we are very much in the replacement market.” He said “changes with corporate tax, more capital going into the business and capital investment could be helpful.”
Asked by Appliance Retailer about Gerry Harvey’s possible bid for The Good Guys, Ford described the Harvey Norman chairman as a “disruptive fellow who had “cleverly wound up the ACCC.” Ford added that “Gerry is not even in the process and he doesn’t have an information memorandum. He said we haven’t sent him one. The fact is he hasn’t asked for one and I don’t think he is really interested. He’s got a great business and I think he has the right contacts and I think he has wound up the ACCC.”